Yahoo Finance Why Acadia Healthcare Company, Inc. (NASDAQ:ACHC) Could Be Worth Watching
Acadia Healthcare Company, Inc. (NASDAQ:ACHC), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$89.06 and falling to the lows of US$80.25. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Acadia Healthcare Company's current trading price of US$80.25 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Acadia Healthcare Company’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Acadia Healthcare Company
What Is Acadia Healthcare Company Worth?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 25.86x is currently trading slightly above its industry peers’ ratio of 22.32x, which means if you buy Acadia Healthcare Company today, you’d be paying a relatively sensible price for it. And if you believe Acadia Healthcare Company should be trading in this range, then there isn’t really any room for the share price grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since Acadia Healthcare Company’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Acadia Healthcare Company?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Acadia Healthcare Company's earnings over the next few years are expected to increase by 32%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? ACHC’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ACHC? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?
Are you a potential investor? If you’ve been keeping tabs on ACHC, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for ACHC, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to dive deeper into Acadia Healthcare Company, you'd also look into what risks it is currently facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Acadia Healthcare Company.
If you are no longer interested in Acadia Healthcare Company, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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